My husband just turned 54. I will be 45 later in the year. We would like to be FIRE by early 2021, when he turns 59 1/2. I am currently puzzling over how we should be allocating our investments (mine v. his; qualified v. non-qualified) and develop a "laddered" withdrawal strategy to accomplish retirement for both of us at that time since I will not be able to tap my investments until much later. I would like some input.
Net worth: 1,264,617
Broken down as follows:
Checking: $2077
Money Market (emergency fund): $19,075
Equity in personal residence: $217,157 (340,000 FMV - 122,843 Mortgage; Mortgage is at 3.25% interest; 11/1/2026 payoff)
Non qualified investments:
Vanguard Index Funds/Inherited bank stock: $54,427
Retirement investments:
Husband is 59 1/2 in 2/2021. I am 59 1/2 in 6/2030.
401K - Fidelity (me): $153,333
Roth - TIAA-CREF (me): $125,012
Trad IRA - TIAA-CREF (me): $63,653
403B - TIAA-CREF (spouse): $477,939
Roth - TIAA-CREF (spouse): $106,949
"Off-balance sheet" items:
Term life insurance policy (spouse): $100,000
Employer-provided life insurance (spouse): $112,500
Employer-provided life insurance (me): $30,000
Home Equity LOA: Draw limit of $75,000 at 5.95% (we've never had to use it)
Other Important Information:
(1) We have no dependents.
(2) We both max our qualified accounts (including catch up contributions) annually. Both employers contribute 10% of our earnings to our qualified accounts. Annual retirement contributions. This comes out to about $65,000 in contributions annually. My "quick and dirty calculation" is that with simple interest of 6% on today's balance, plus $422,500 in projected additional contributions we will have $1.7 Million in retirement accounts by my husband's retirement date. Approximately $1,050,244 of this will be in my husband's accounts.
(3) We also are almost assured of getting another $105,000 in unqualified stock gifts between now and my husband's retirement.
(4) Another big unknown is the timing of substantial inheritance, conservatively valued at $500,000. I would say within the next ten years for sure, timing uncertain. (Obviously this would be a game-changer.)
(5) I have not seriously thought about the implications of tapping my Roth before age 59 1/2. I have held it more than 5 years.
(6) We will move when we retire. The plan is to pay cash for a house valued roughly the same in today's dollars.
(7) I've eeked out a retirement budget and know that we could live like kings on $80,000/year. I am going to develop two other budgets with smaller spending limits ($70K and $60K) to allow for other possibilities. We would like to travel quite a bit.
(8) This does not take Social Security into consideration.
Projected net worth at 2/21 retirement date (without inheritance): $1.87 million ($270K home equity; $1.7 retirement accounts; $20K cash; $170,000 non qualified investments)
The same (with inheritance) would be $2.27 (give or take) and increase our non-qualified investments to $670,000.